Speaking at a results presentation yesterday, CDI fund manager Trevor Hardie said the Australian office market has just experienced a year of weak demand – and much the same is expected in 2014.
"Vacancies are expected to increase over the next six months in most markets, with supply, even net of withdrawals, outstripping demand," said Mr Hardie.
No growth in effective rents is anticipated, he said – and there will likely be further pressure on effective rents in both Brisbane and Perth.
"Investment demand is still strong for well-leased properties. However, with limited stock and buyers seeking higher yields, we’re now seeing evidence for a growing demand in suburban and fringe markets," said Mr Hardie.
On the back of this sort of demand, yields in 'fringe' markets have the potential to firm, he said.
As part of its presentation, CDI announced normalised earnings of $23.9 million for the six months ended 31 December 2013 - up from $22.9 million for the previous corresponding period.
The firm is on target to deliver its financial year 2014 earnings per share guidance of 22.3 cents per share. CDI's balance sheet gearing is sitting at 31 per cent.
“We continue to maintain and execute a consistent strategy. Our continued focus on portfolio enhancement, improving leasing metrics, and taking an active approach to capital management continues to deliver,” said Mr Hardie.
“We remain focused on de-risking our future lease expiry profile with the objective of continuing to grow normalised earnings and distributions,” he said.
